Tue August 7, 2012

British Bank Accused Of Hiding Iranian Transactions

Financial regulators in New York said yesterday they may bar a British bank from doing business in the state. They said that because the bank allegedly laundered some $250 billion in Iranian money through its branch in Manhattan. The bank is Standard Chartered Bank. It does much of its business in Asia, Africa and the Middle East. But like any global bank, it wants to have a foothold in the U.S. markets, and that foothold is now in danger. For more, we turn to NPR's Jim Zarroli in New York.

Jim, Good morning.

JIM ZARROLI, BYLINE: Good morning, Steve.

INSKEEP: When did this alleged money laundering take place?

ZARROLI: Well, this is all contained in an order that was released yesterday by the New York State Department of Financial Services. It was really unsparing in the way it described the bank. It says between 2001 and 2010, the Standard Chartered Bank basically operated as a rogue institution. It transferred Iranian money in and out of its New York branch, even though the U.S., as you know, had sanctions in place against Iran.

There were some 60,000 transactions carried out. The bank allegedly told its employees how to conceal what was going on. So this wasn't a few employees bending the rules. This was bank policy. And the regulators also say they found evidence that the bank may have done the same thing for some other countries that were under U.S. sanctions, like Libyan, Sudan and Myanmar.

INSKEEP: So what was the money used for, the Iranian money?

ZARROLI: Well, the bank regulators say, you know, basically, we don't know. This was money that came from Iranian banks and companies, even apparently some government agencies. There was a lot of it.

The regulators tell us that some of it may have ended up being used in Iran's nuclear program, or even to support terrorism, but nobody knows. And the regulators say that's because of these elaborate steps that were taken to conceal, you know, where the money went. They even allegedly had a kind of manual in place to explain to employees how to hide the transactions from the Treasury Department.

INSKEEP: I assume this is part of Standard Chartered's defense now. It's not like there's an account that was labeled Iranian nuclear account. The very fact that things were complicated, does that give them an opportunity to say they didn't actually know what was going on?

ZARROLI: Well, what they've said is that, you know, in pretty strong language, that they deny everything that was happening, that they, in virtually every case, they fully complied with U.S. law. Standard Chartered really has a lot at stake, here. The regulators are basically saying, you know, tell us why you shouldn't lose your license to do business in New York state.

And it's not going to stop there, either. The FBI has been investigating the bank. There's a lot of focus on money laundering by big banks right now. The Senate came out with a report saying HSBC did business with Mexican drug cartels. A few months ago, the Dutch bank ING acknowledged that it moved Cuban and Iranian money through the U.S. So the financial system, you know, banks like Standard and Charter are really under a lot of pressure right now from law enforcement.

ZARROLI: Well, yeah. According to the order that came out yesterday, the chief executive of the bank's North American subsidiary did issue a warning about what was going on. He told the bank, you know, this has the potential to really do us serious harm. The bank's reputation could really be hurt. I think he used the word catastrophic. He said there could be criminal liability.

And the response that he got was, you know, not very affirming. The regulators found an email in which someone at the bank basically said to him, you know, look. Who are you Americans to tell the rest of the world not to do business with Iran? And so he sort of pulled back at that point.